Investors pocket big profit in $52 million shopping center sale

A shopping center just south of Midway International Airport sold for almost $52 million, bringing a big return to the investors who bought it three years ago.

Star Lake Fund, a fund of the New York Common Retirement Fund and New York-based J.P. Morgan Investment Management, paid $51.9 million for Burbank Station, a fully leased, 309,860-square-foot shopping center at 7700 S. Cicero Ave. in Burbank, according to Cook County property records.

“It is good old-fashioned leasing and paying attention to the property,” Abbell President Norris Eber said of the increase in value. “And, of course, real estate values have improved since the purchase in 2012.”

Abbell will continue to manage the property for the new owner, he said.

The shopping center was almost fully leased when Abbell and Hutensky bought it, but at the time it faced several potential vacancies. Nearly one-fourth of the property was vacated and re-leased under their ownership, Eber said.

LEASES, EXTENSIONS

The center lost large Sam Ash Music and OfficeMax stores, but those spaces were filled with a 32,154-square-foot Ashley Furniture store and a 29,650-square-foot Bob's Discount Furniture store that will open in February, according to a flier from Los Angeles-based CBRE. George Good, Richard Frolik and Christian Williams of CBRE brokered the sale.

In addition to about a half-dozen new leases, several existing tenants signed long-term extensions, said Brad Hutensky, president of Hutensky Capital.

“We took a property that was seen as an opportunistic property and turned it into one that institutional investors were interested in,” he said.

Shopping center values have increased amid rising rents and falling vacancies. Overall Chicago-area retail vacancy fell to 9.3 percent in the third quarter, down from 9.8 percent a year earlier, according to CBRE. The southwest suburbs had just 5.8 percent vacancy, fourth-lowest of the area's 12 submarkets.

“There's been a lot of capital chasing retail for the last few years, but it matters greatly what property you're talking about,” Hutensky said. “Making this property less risky and higher-performing increased the number of people who were interested in buying it. There's more interest in properties that are passive and that don't require as much hands-on expertise.”

Hutensky continues to seek Chicago-area properties that need new tenants. Earlier this year, the firm teamed up with Highland Park-based Tucker Development to buy the Town Square Wheaton shopping center for $57.3 million, he said.